In Paulson's book "On the Brink" -- a Bush-Sarkozy battle, Clint Eastwood advice, Reagan principles and worries over Sarah Palin's grasp of the crisis

By Steven Levingston

During his sleep-deprived campaign to save America from financial collapse, former Treasury Secretary Henry Paulson watched as former President George W. Bush beat back efforts by French President Nicolas Sarkozy to steal into the limelight, got advice from Clint Eastwood on how to handle House Speaker Nancy Pelosi, fretted over his betrayal of the Reagan principles, and worried that Sarah Palin did not grasp his program.

In his book, "On the Brink: Inside the Race to Stop the Collapse of the Global Financial System," Paulson recounts Sarkozy's visit to Camp David in October 2008 where the French president pressed for a G-8 style summit in New York to address financial reform. Sarkozy used all of his charm to sell Bush hard on his plan, arguing that the White House would demonstrate its leadership by hosting the summit.

Bush, apparently, was being dragged into a battle between France and Britain for leadership of reform in Europe, a role Sarkozy wanted to claim for himself over British Prime Minister Gordon Brown. Sarkozy sought the summit as a way to put his stamp on certain issues such as mark-to-market accounting and the role of rating agencies.

"The White House suspected that Sarkozy was looking to pull off a publicity coup on our home turf," Paulson writes in the book, which is to be released next week. The Washington Post bought a copy at a bookstore in Washington.

Bush agreed that a summit was necessary but favored a larger global group on the scale of the G-20 including China and India.

"Sarkozy dominated the hour-long meeting ... but he must have left frustrated," Paulson writes. "He'd won agreement on a meeting - which we had already decided to hold - but little beyond that."

Toward the end of his tenure, Paulson attended a White House reception before the Kennedy Center Honors at which Clint Eastwood would speak on honoree Morgan Freeman. Eastwood happened to see Paulson and Pelosi in deep conversation. As Paulson told Pelosi he may have to notify Congress he needed the last tranche of the TARP funds, Pelosi grabbed his hand and urged him not to do it.

When Eastwood walked up, he said to Paulson: "I don't know what she's talking to you about, but she's stronger than you, Mr. Treasury Secretary. I suggest you do whatever she wants."

Although swamped by the crisis, Paulson honored a promise to Nancy Reagan and broke away from Washington to speak at the Ronald Reagan Presidential Library in California. He checked into an inn nearby and spent a sleepless night amid Reagan White House photos and images from his Santa Barbara ranch. He tossed and turned thinking about the irony of his situation - he was a free-market believer like Reagan but he would be a treasury secretary forever remembered for government intervention and bank bailouts.

"Of all the rough nights I'd endured throughout the crisis, this one was by far the worst," Paulson writes. "I lay awake tormented by self-doubt and second guessing."

During the presidential campaign Paulson phoned Sen. John McCain to discuss the planned takeover of Fannie Mae and Freddie Mac. Paulson hadn't met Palin but quickly sensed that her selection as the ticket's running mate had revitalized McCain. The senator was eager to introduce Palin and put her on the phone. But, Paulson writes, "I'm ... not sure she grasped the full dimensions of the situation I had sketched out."

He also had a poor personal first impression of her. "Right away she started calling me Hank," he writes. "Now, everyone calls me Hank. My assistant calls me Hank. Everyone on my staff, from top to bottom, calls me Hank. It's what I like. But for some reason, the way she said it over the phone like that, even though we'd never met, rubbed me the wrong way."

Comments

Do Paulson's misgivings about betraying Reagan's free-market ideology constitute an admission that Reaganomics was, in the final analysis (as Bush 41 said when he and Reagan were vying for the GOP nomination), "voodoo economics"??

Is anyone really surprised that Paulson thinks Palin didn't grasp the full dimensions of the situation he had sketched out for her?

How many people (not including WaPo) will pay real cash for this book? Hank sure doesn't need the money . . .

Posted by: post_reader_in_wv | January 28, 2010 10:03 PM

Wasn't Paulson the one that insisted AIG be bailed out?

How come he didn't write a book about that?

Posted by: lcarter0311 | January 28, 2010 11:01 PM

Paulson-Bernanke-Geithner... they were the team that saved Wall Street's royal a** in 2008.

Notably, Obama decided to keep 2/3 of Bush's team. Geithner was promoted from President of the NY's FED to Treasury Secretary; Bernanke has just got another term at the FED.

Only Paulson is out, writing books for a living. Poor baby.

Posted by: tropicalfolk | January 29, 2010 12:31 AM

Paulson should be writing "Life in Leavenworth" too. He should be indicted for conspiracy, fraud, perjury and swindling the taxpayers.

Posted by: npsilver | January 29, 2010 12:32 AM

Was 'Hank' at the April 28, 2004 meeting when the SEC decided to allow the investment banks unlimited leveraging practices as well as a ticket into the EU?

Posted by: jphunter10 | January 29, 2010 1:16 AM

I wonder why Paulson chooses to distance himself from Palin, or dismiss her grasp of the situation. Is anyone sure that Paulson himself knew what the hall was happening? I would love to hear Biden's version of events. Sounds to me like typical patter from the Republican establishment.

Posted by: RobbyS | January 29, 2010 6:42 PM

I can't wait to read his book maybe he will tell us more about the most corrupt adm. in our history. It should be called 2001 thru 2008 The Destruction of America.

Posted by: SWAMPYPD | January 30, 2010 12:21 AM

It's funny how these 'Republicans' are trying to put the blame on someone else besides themselves! The GOP is nothing more that a bunch of 'Fat Cat' politicians who want nothing more than to get richer, while taking everything they can from the working class. The entire lot of them needs to be hung up like laundry drying in the wind! They sat on there 'Royal' behinds during most of the State of the Union address. Their smug and arrogant faces showning the American people that they don't give a hoot about jobs, or anything else that would help the middle class! I wonder what our Founding Fathers would think if they saw what was going on in Washington, D.C. right now?

Posted by: tfcolpittsiv | January 30, 2010 1:23 AM

My, my. Old Hank, the Reaganomics protege of Ronald Reagan, was torn because he had to abandon Ronnie's principles to save the nation from disaster. What could be more pathetic?

Ronald Reagan had no scruples, much less principles. Need I remind everyone he was the bufoon who played straight man to a chimp - who was smarter than he. Ronald Reagan stabbed countless union workers in the back when he became a secret agent of the nefarious congressional HUAC and Internal Security committee. He ratted out innocent men and women. Reagan was the man who threw the air transport industry into thoughtless turmoil by firing the air traffic controllers. They wanted to sit down and talk with him. Naturally, he had nothing to say to them, He was too stupid to follow a conversation.

That was who Henry Paulson measured himself against. No wonder the entire financial industry went belly up. The nincompoop follower of a barely literate president was chosen by George W. Bush - himself notorious for his insipid stupidity - to be Treasury Secretary.

And now Paulson is trying to justify himself. To whom? Certainly not to me. His eight years as Treasury Secretary ought to be followed by eight more in prison for his misfeasance in office.

Posted by: andygrossman | January 30, 2010 8:38 PM

Paulson came in with impressive Wall St. background we all know.

The part that did not impress me was he never forsaw the subprime crisis that was brewing for years before he became Treasury Secretary ?

How come he never warned the Bush Administration about their wild deficit spending?